Calls for new bids on GNER route

Fresh bids should be allowed for the high-profile East Coast rail route if the current operator fails to pay a £1.3bn premium promised to the Government, according to industry sources.

Christopher Garnett, the chief executive of the successful bidder Great North Eastern Railway, has indicated the massive subvention he pledged to the Exchequer might be under threat because a competitor has been allowed to run services on the network. Mr Garnett said officials told him to "ignore" such a possibility.

But a source involved in the bidding process said all contestants had been explicitly warned by the Strategic Rail Authority (SRA) that they could face competition from train operators taking advantage of "open access" rules.

It is understood at least two of GNER's rivals during last year's bidding process had included caveats in their submissions which warned that premiums to be paid to the Government would be lower if other operators were given "slots" on the East Coast route. Apart from the GNER attempt to retain the franchise, there were also bids from FirstGroup, Virgin-Stagecoach and Danish state railways. The industry source said: "If GNER can't keep to the terms of the franchise agreement, then re-tendering the franchise is the only option."

Last Friday Mr Garnett said he was assured no new operators would be allowed on to the route. He was speaking after a decision by the Office of Rail Regulation to allow Grand Central to run Sunderland services, preventing GNER operating extra services to Leeds.

Another source said GNER had originally written a caveat into its submission, but was told by SRA officials to take it out.